Saul Klein is the dean of the Gustavson School of Business at the University of Victoria.
This is the summer of travel hell. With demand rebounding strongly to pre-COVID-19 levels, the system is crumbling under the pressure. Flights are delayed or cancelled. Checked luggage is going astray. Long waits are the norm, whether physically standing in line or on interminable telephone holds. And this is while many would-be travellers cannot even get their passports renewed. Staff shortages are revealing systemic failures as airlines, airports and regulators blame each other for the chaos. Customer complaints are soaring and front-line staff are bearing the brunt of the ire.
It is certainly true that the sector was buffeted badly by the pandemic. It is difficult for any organization to cope with demand collapsing and then booming. At the same time, however, this pattern was not unexpected, even if the speed of the transition caught everyone off guard.
We seem now to be in a vicious downward spiral. As the passenger experience declines, front-line staff decide that it is not worth taking the abuse. They leave and the cycle continues.
It is also true that the system was not in good shape before COVID hit. Airlines have routinely been amongst the least trusted brands in the country, as results from the Gustavson Brand Trust Index attest, and the airport experience was far from pleasant. Rather than using the COVID-induced downturn to fix the problems, however, it appears that the only response was to cut costs and thereby reduce capacity, even if it meant undermining future recovery.
So what is the solution now? It should involve increasing competition. Yet, the response appears to be entirely the opposite. Air Canada and United Airlines, for example, have just announced that they are increasing their code-sharing arrangements on international flights. The promise is that “this expanded partnership will provide an enhanced experience for all transborder travel.” I doubt that this will happen.
Code-sharing is a deceptive practice that subverts the forces of competition. We would not accept it in any other context, but our regulators tolerate it amongst airlines. In effect, it involves one company slapping its logo onto another’s products, deliberately misleading consumers as to what they are buying. Would we accept going into a Mercedes dealer, buying a car, and then being given a different automobile that just has a Mercedes sticker attached? And then, if there was any problem, would we accept not knowing where to turn as both auto makers denied that it was their responsibility?
For years, regulators have allowed competition in the airline sector to fall dramatically. Airlines promise that their collaborations will make the traveller’s experience more seamless. This is self-serving nonsense, since it is the airlines themselves that have created the friction. It used to be standard practice, for example, for one airline to transfer checked baggage to another. This has been eliminated unless they are on the same ticket. (This is akin to letting mobile phone companies refuse to allow us to call anyone on a different operator’s network.) It used to be assumed that if a customer wanted to speak to a customer service agent, all it would take was a quick phone call. This has disappeared.
With all these frustrations, what can a disgruntled passenger do? As it stands now, they have little opportunity to take their business elsewhere. And, as long as airlines don’t have to worry about that happening, their incentive to offer better service is dulled.
It is not that we don’t know how to provide good service. There are ample examples of businesses treating their customers well; supporting and empowering their employees; and succeeding in the process. In short, it does not have to be the way it is now.
A simple solution involves restricting airlines from engaging in anti-competitive conduct and deceptive practices. This is something the Competition Bureau should be doing anyway. Let’s force Air Canada and United Airlines to compete for our business, not develop cozy partnerships that serve only themselves. And, while we’re at it, let’s follow up by reducing the constraints on market entry and loosen foreign ownership restrictions too, so that new players can offer their services.
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